3 Mayor's office employees who resigned during the summer after purchasing card violations were reported

12 Purchasing cards remaining in the executive branch

170 Number of cards used by executive branch employees in the 2007 fiscal year

2000 Last year the travel policy was revised prior to July

$20,000-plusExpenses reimbursed by county employees since July 2006

Today: Knox County's purchasing card program: Policy v. practice

Monday: Not following policy: Travel in Knox County Mayor Mike Ragsdale's office

Tuesday: Fill 'er up: Food and gas charges by county employees

Wednesday: Pants, sweaters and ties: Clothing purchases in the Knox County Sheriff's Office

Thursday: Training and transport: Travel in the Knox County Sheriff's Office

Knox County employees charged more than $7.8 million in taxpayer dollars to plastic last fiscal year.

From July 2006 to June 2007, the purchasing card program tallied more than 19,000 transactions ranging from beauty supplies for school cosmetology programs to trips to conferences in Las Vegas.

Most of the charges reviewed by the News Sentinel were allowed under the purchasing card and travel policies at the time.

But hundreds weren't.

Knox County Auditor Richard Walls is conducting a formal audit of county charges as far back as 2003, combining his audit of the mayor's office's cards with an audit of other county p-cards.

In anticipation of the audit, which could come out as soon as this month, the News Sentinel reviewed records back to the beginning of fiscal 2007. Among findings that will be detailed over the next four days:

Two executive assistants and a former finance director left their jobs in County Mayor Mike Ragsdale's office this summer when news of their improper p-card expenses broke. The Knox County Commission then called for an audit of the program.

"I don't know where the bulk of the violations may come from," Commission Chairman Scott Moore said. "What it appears to me, from what I've seen - and I've not seen very much - is most of it is going to be coming from the executive branch."

Commissioners' scrutiny and public audits have focused on Ragsdale's office, and Ragsdale acknowledged the financial mistakes of his administration. Walls' audit of p-card use expands beyond the mayor's office to all county departments.

Changes to the county p-card and travel policies should be implemented by Dec. 1. A draft of the new regulations is undergoing final review.

Improper use of plastic

P-card publicity this summer focused on three Ragsdale employees who resigned.

The mayor's executive assistant, Margie Loyd, charged a $900 Caribbean cruise to her county p-card.

John Werner, who announced his resignation as finance director in July, charged alcohol, which was a violation of county travel policy. He also had charges to Smoothie King, the Apple Store and the Auto Spa in LaFollette, Tenn.

A review of all the fiscal 2007 charges found other problems expected to be detailed in Walls' audit.

Employees charged gas and travel unrelated to county business, for instance, in violation of county policy.

Workers without county cars were supposed to file mileage reports, not fill up their tanks on a county card.

And all travel expenses were supposed to be filed on Travel Expense Reimbursement or travel request forms processed through the Finance Department, including airline tickets and hotel reservations. The purchasing card policy, in fact, prohibited "the prepayment of lodging."

The official travel policy was not consistently applied, however, because p-cards allowed individuals and departments to bypass that control.

Many purchasing cards now in question initially couldn't be used for travel, but about a year into Ragsdale's administration, the mayor approved opening many cards to such charges, said Hugh Holt, the county's purchasing director and deputy finance director. Ragsdale was first elected in 2002.

The travel policy at the time, which had been last reviewed in 2000, predated the purchasing card program and did not address the use of p-cards for travel and entertainment expenses. The county's chief financial officer, John Troyer, acknowledges the old travel policy did not coincide with the purchasing card policy.

"What was supposed to happen is our travel policy was supposed to be changed, and it sort of got pushed back on the back burner," Holt said.

More than $130,000 was charged for hotels and flights in the mayor's, sheriff's and County Commission offices in the 2007 fiscal year.

The travel policy governing the 2007 fiscal year also outlined meal regulations, limiting reimbursements to a daily maximum and stating that "reimbursement for meals will only be made when overnight travel is required."

More than 250 meals were charged in Knox County by members of Ragsdale's administration, however, totaling more than $17,000. The mayor's office generally justifies the charges as necessary working meals.

Travel regulations allow employees to use p-cards but the county accepts no liability for improper charges, and the regulations state that "deliberate disregard for these regulations while traveling on county business or filing of an intentionally misleading or fraudulent travel claim are grounds for corrective action up to and including termination of employment."

Department heads were responsible for monitoring travel and making sure employees understood regulations.

Commissioner Mike Hammond also has raised questions about thousands of dollars in clothing charges made on p-cards in the Knox County Sheriff's Office.

Keeping check

Sometime in recent years, the county Finance Department stopped its annual audits of the p-card program, Holt said. Instead, Walls was conducting only a 10 percent sampling of the charges.

Holt said he and his staff received charge alerts from Visa and called to question department heads about travel, gas and food expenses.

Most of the year's charges were for valid county purchases, Holt said.

Troyer said department heads were allowed to use their discretion to make purchases within their budgets.

"Each department has a budget, and each department is going to make a decision about the validity of expenses for the department," said Troyer, who replaced Werner.

But those decisions are supposed to be made within county policies.

One senior director, Finch, was reprimanded for her oversight of the Community Services p-card program.

Dwight Van de Vate, county spokesman, said Ragsdale's staff questioned how the violations occurred.

"Were our management controls inadequate, and did they create an environment where this sort of thing could go on undetected?" Van de Vate asked. "Or did staff members fail to observe our management controls?

"At the end of the day, the answer to both was yes. That's why you saw both staff changes and retooling of the management controls."

The travel policy changed on July 1. Van de Vate said the new policy had been in the works for about a year.

New policies

The new policy for improper p-card use is punitive and simple:

Three strikes, you're out.

The first violation will prompt a warning. The second will warrant a 60-day suspension of the card. The third will lead to loss of the card and termination from the job.

In the wake of this summer's controversy, the mayor revoked about 160 p-cards, leaving 12 in the executive branch and about 170 in other departments. He also reorganized his staff to add financial and policy compliance duties to two individuals.

The person monitoring p-cards in each department should now be a person of authority in the office, Holt said.

Holt said he thinks that continued training and respect for the regulations will allow the program to work properly.

Now there is a full financial audit of p-card charges once they get to finance, Holt said.

Hugh Holt said the county would review the new purchasing card regulations before implementing them, possibly on Dec. 1.

The changes to the purchasing card regulations would affect not only use of the cards but also the county's travel policy.

"There are some things that we better define," Holt said.

Holt said p-cards make the purchases more efficient and save the county money.

Using p-cards to buy food for the corrections facility is an example of using the program properly, Holt said. Last year, the p-cards streamlined more than $1.9 million in direct correctional facility purchases.

"One option now would be to cut off the p-cards, and I believe that there is a real value to keeping them just because of the benefits to the county," Troyer said. "It's just a matter of being diligent."

Ansley Haman may be reached at 865-342-6341. Rebecca Ferrar contributed to this report.